Vivendi has completed the €17 billion sale of SFR to Numericable, including a cash element of €13.37 billion. A portion of the proceeds is already earmarked for the purchase of French MVNO Virgin Mobile

In fact, Vivendi is contributing €200 million to finance Numericable’s acquisition of Virgin Mobile France, which was approved by the country’s competition regulator earlier this week. It will also use some of its cash pile to reduce debt.

The €200 million contribution was previously agreed by Vivendi, as a means to increase its stake in Numericable after the merger with SFR.  Vivendi has maintained a 20 per cent stake in the merged entity, which it is free to sell at the end of a one-year lockup.

In addition, Numericable’s owner, Altice, has call options which are exercisable in several tranches at market value subject to a floor between the nineteenth and the forty-third month following the closing of the deal.

The total value of the SFR deal is €17 billion, with the balance made up of Vivendi’s 20 per cent stake in the merged entity.

In an interview with French daily Le Figaro, Numericable chief executive Eric Denoyer said that he wants SFR to become the company’s flagship brand and give Orange, France’s biggest operator, a run for its money.

Part of his mission will be to expand 4G coverage from 50 per cent of France’s population to 70 per cent.

Vivendi had chosen Altice, Numericable’s parent company, back in April as the successful suitor for SFR, with its offer of €13.5 billion and a 20 per cent stake for Vivendi.

Key to Vivendi’s thinking was that Altice offered a low regulatory risk because SFR and Numericable are not present in the same market segments and their activities are complementary. The possibility of pursuing a quadplay strategy was also a factor in the decision.

The group has the potential to receive an earn-out of €750 million depending on the financial performance of the new entity.

Vivendi also said it will use the proceeds to cut debt, announcing its intention to proceed with early redemption of €5.3 billion in bonds.

Vivendi has total outstanding bond debt of €6.7 billion with a remaining term of four years at an average rate of 4.1 per cent. It will use the sale to cut debt, and wants to proceed with early redemption of €5.3 billion.